President Donald Trump moved on Friday to exempt major agricultural imports such as coffee, cocoa, bananas and selected beef products from his higher tariff rates, responding to political pressure over elevated grocery prices in the United States. The exemptions also covered fruits such as tomatoes, avocados, oranges and pineapples, as well as tea and spices. The change marked a reversal for Trump, who had previously argued that consumers would not ultimately bear the cost of higher duties.
The announcement came one day after new trade framework agreements were reached with Argentina, Guatemala, El Salvador and Ecuador that introduced tariffs of between 10 and 15 per cent on most goods. Food at home inflation has remained elevated, with prices up about 2.7 per cent compared with a year earlier in the latest available consumer price index data.
Beef prices have been among the most affected. Over the past year, the United States imposed steep duties on major exporters including Brazil, Australia, New Zealand and Uruguay. Brazil faced effective rates above 75 per cent and higher tariffs on Australian beef also reduced supply. These measures coincided with the United States cattle herd falling to its lowest level in nearly 75 years, tightening supply and pushing uncooked beef prices up between 12 and 18 per cent year over year. Producers have cited drought, high feed costs and tariffs on inputs such as steel, aluminium and fertiliser as constraints on rebuilding herds. Frequent policy changes have also discouraged long term investment.
Coffee has experienced similar tariff related pressure. Ground roast coffee reached a record 8.41 US dollars per pound in July, a 33 per cent increase from the previous year. Trump’s 50 per cent tariff on Brazilian coffee, combined with duties on imports from Vietnam and Colombia, raised costs across the supply chain. Since the United States does not grow commercial quantities of coffee, roasters and retailers had no alternative sources. Consumer coffee prices rose nearly 21 per cent year over year in August.
Cocoa prices remain more than double pre pandemic levels and currently sit around 5,300 US dollars after three years of weather related crop failures in Ivory Coast and Ghana, combined with tariff effects. Hershey executives recently said they expect between 160 million and 170 million US dollars in tariff expenses this year, contributing to retail chocolate prices rising about 30 per cent ahead of Halloween.
